In a thirty-two page opinion dated March 12, 2015 Judge Noel Lawrence Hillman, a federal district court judge for the District of New Jersey, denied a Motion to Dismiss made by defendants Phillip Ivey and codefendant Cheng Yin Sun (hereinafter collectively “Ivey”) of a lawsuit filed by plaintiff Marina District Development LLC commonly known as the Borgata Hotel & Spa Casino in Atlantic City (“Borgata”), New Jersey against Ivey. What does this skirmish outcome mean in plain language between for the legal war between Borgata and Ivey in relation to ultimate victory? Not much. Not yet.

Most reports of this development focus mainly on the fact that Ivey’s motion to dismiss the lawsuit was denied. This is true. But it is not the complete picture of the court’s opinion. A little history is in order. As you recall Ivey played baccarat against the house four separate times –April,May, July, October -of 2012 and won close to 10 million dollars according to Borgata. The lawsuit was started much later on April 9, 2014 after Ivey’s edge sorting in punto banco at London’s Crockfords Casino in August 2012 came to light. Borgata’s 38-page complaint

including exhibits alleged twelve actionable counts including:

Breach of Contract

Breach of Implied Contract

Breach of Implied Contract Of Good Faith and Fair Dealing

Fraudulent Inducement

Declaratory Judgment for Rescission based on Unilateral Mistake

Fraud

Declaratory Judgment for Rescission based on Illegality of Purpose

Unjust Enrichment

Conversion

Civil Conspiracy

RICO (enterprise through a pattern of racketeering activity in violation of the anti-money laundering statute

NJ RICO

As an aside, this motion and opinion did not deal with the six claims of Borgata against the card maker Gemaco for Breaches of Contract, Express Warranty, Implied Warranty, Negligence, Respondeat Superior, and Declaratory Judgment for Contribution and Indemnification.

In almost every major suit, especially in federal court, a motion to dismiss on the pleadings is made by any good defense lawyer. If you win you can be assured it will be appealed adding more years to the litigation on the front end. And in the opinion there were seeds of hope for a partial but not necessarily reassuring victory for Ivey. Borgata claimed the underpinnings of its fraud and fraud related causes of action were that Ivey wanted the following terms as reported by Poker News:

Borgata claims Ivey represented that he needed these accommodations due to superstition, and that this was a misrepresentation-a fraudulent pretext for Borgata agreeing to the above Ivey favorable circumstances. This fraud converted this legal gambling game of baccarat into an illegal gambling game, a violation of the Casino Control Act (CCA) and the Division of Gaming Enforcement (DGE) for the State of New Jersey.

Ivey’s lawyers used the Borgata’s pleading to say that if the pleading is correct, that there was a violation of a specific law- the CCA- and concomitant regulations, only the DGE can have jurisdiction over this claim because it has unilateral and sole jurisdiction over any violations of the CCA and regulations. That means that Borgata could not be a plaintiff in any civil court action against Ivey for such fraud. That would eliminate any possible emotional jury verdicts yielding large damage claims, economic or punitive, and for the other sides lawyers’ fees. Also the judge did not know what happened after Borgata reported Ivey to DGE: whether DGE agreed it was illegal and passed on any action against Ivey, or decided that it had no jurisdiction, or in the best possible world for Ivey decided his edge sorting was not violative of the CCA. The judge listened, reviewed the law, and did not reject the argument. He ordered that Borgata answer why the fraud and fraud related counts should not be remanded to DGE for an administrative ruling:

In the meantime he also ordered that traditional lawsuit continue. But there was also a second ribbon of hope given to the defendants in between the lines.What does this mean? In my considered legal opinion the judge understands, though he cannot legally accept, the DUH defense: What took you so long to Borgata to see that you were being beaten at your own game? Unfortunately for Ivey vs. any casino, my newly coined DUH theory of contributory negligence doctrine will not help him in a summary judgment motion which is decided solely on the law using the undisputed facts of the particular case (much like the Crockfords decision in England). But it may help Ivey if he ever gets to a jury. It is called jury nullification. The jury could feel: We agree that you Phil Ivey were not playing by the normal rules but we will overlook it and find for you because the casino is well- a casino-and has an edge every day against the player. In fact, Ivey’s best hope is that a jury feels the same way.

In any event, if Ivey beats Borgata a second time, the ultimate real financial winner may still be Borgata. It is likely to recoup much of its losses from the insurance carrier for GEMACO—unless the DUH contributory negligence defense succeeds for GEMACO. And there it could have legal legs.

One Response to "Borgata & Phil Ivey: Motion to Dismiss Denied- What Does It Really Mean? Linda Kenney Baden Comments"

I’m stunned they agreed to those terms, and that the dealer continued to cooperate with his requests to rotate cards, especially knowing that NJ is the only jurisdiction where you can’t ask a player to leave just because you don’t like their (legal) style of play. I can only assume they got greedy and thought sooner or later he’d screw up his system and lose it all.

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